Chicago City Council passes paid sick leave ordinance — what employers need to know to avoid a headache

On June 22, 2016, the Chicago City Council passed an ordinance requiring Chicago employers to provide employees with up to 40 hours of paid sick leave each year. The new law is slated to go into effect on July 1, 2017. By passing this ordinance, the first of its kind in Illinois, Chicago is set to join several other cities and states that require paid sick leave.

Here are a few things that employers need to know regarding this new law:

Essentially all Chicago employers will be impacted.Generally, the new ordinance applies to any business or individual that employs at least one “employee” and has a facility within Chicago’s city limits or is subject to certain city licensing requirements. The term “employee” is likewise broad, covering anyone who works at least 80 hours within 120 day period (i.e., 20 hours a month), with very few exceptions.

In light of these definitions, most Chicago employers will need to comply with the ordinance.

Sick leave must accrue on an hourly basis, subject to certain caps.For hourly employees, paid sick leave accrues in one-hour increments for every 40 hours worked. For salaried employees classified as exempt, such employees are presumed to have worked 40 hours each week. However, each employee is capped at accruing a total of 40 hours of sick leave each year, unless the employer opts to set a higher limit.

Current employees must begin to accrue paid sick leave on July 1, 2017. Employees hired after that date must begin to accrue paid sick leave on the first calendar day after the employee starts work. Employees must be permitted to use their accrued paid sick leave no later than six months after starting their job.

Employers must permit employees to “carry over” accrued but unused sick leave.Employers generally must permit employees to carry over a maximum of 20 hours of accrued but unused sick leave each year. If the employer is subject to the Family Medical Leave Act (“FMLA”)—i.e., 50 or more employees, the requirements are even more stringent. Employers subject to the FMLA must permit eligible employees to carry over an additional 40 hours of accrued but unused sick leave each year, although they can require that these 40 hours be used exclusively for FMLA purposes.

Although employers are required to permit this “carry over,” the ordinance notably does not require employers to pay out on any accrued but unused sick leave upon employment termination.

The notice requirement could leave employers in a lurch.An employee is permitted to use paid sick leave when: (1) the employee or a family member is sick, injured or receiving medical care; (2) the employee or a family member is a victim of domestic violence or a sex offense under Illinois law; or (3) the employee’s place of business or the employee’s child’s school/caregiver is closed by a public official for a public health emergency.

An employer can require its employees to provide up to seven days’ notice before taking leave, if the need for leave is “reasonably foreseeable,” e.g., the leave is for a doctor’s appointment or to attend a court hearing. Otherwise, the employee need only give notice “as soon as is practicable” on the day the employee intends to take the leave. The employer likewise cannot require the employee to find a replacement worker, potentially leaving the employer in the lurch when its employees call in sick.

An employer’s ability to ask for sick leave documentation is limited.Under the new scheme, an employer cannot require an employee to provide documentation from a health care provider or other proof of absence unless the employee is absent for more than three consecutive work days. While an employer can discipline an employee for using sick leave for purposes other than those permitted, this constraint may make “policing” difficult.

If an employer already has a paid time off/paid sick leave policy already in place, it may not be required to provide additional paid leave. If an employer has a policy in place that grants employees “paid time off in an amount and manner” that meets the requirements of the ordinance, it may not be required to provide additional paid leave. Still, given the ordinance’s stringent requirements and accrual model, even if an employer has an existing policy in place, it may need some substantive revisions.

Employers must provide its employees with notice of their rights under the new ordinance.Employers will be required to post a notice advising employees of their rights under the ordinance in a “conspicuous place” at each of the employer’s facilities within Chicago city limits. Likewise, employers will be required to provide each employee with a handout stating the same with the first paycheck issued after they become subject to this new ordinance. The City’s Department of Business Affairs and Consumer Protection will draft form notices for employers’ use.

Failure to comply with the above regulations could be costly. The ordinance itself expressly creates a cause of action against an employer who violates any of the paid sick leave provisions, providing that any affected employee may recover damages in the amount equal to three times the full amount of any unpaid sick time denied or lost by reason of the employer’s violation, interest, costs and attorney’s fees.

As such, we recommend that Chicago employers take action now to ensure that they are in compliance as of July 1, 2017, including conducting a thorough review of existing policies and potentially drafting new policy language regarding sick leave and paid time off.

The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.